4000 - Advisory Opinions

You have asked our guidance with regard to the proper
interpretation and application of the Federal Deposit Insurance
Corporation Improvement Act of 1991, Pub. L. No. 102--242, 105 Stat.
2236 (1991) ("FDICIA") and its associated rules and regulations
as they apply to insurance coverage and assessment of
benefit-responsive bank investment contracts ("BICs").

You understand, that under FDICIA, benefit-responsive BICs are no
longer treated as insured deposits effective last December 19, 1993. At
the same time, FDICIA both excluded BICs from the assessment base and
added a new risk based assessment system that did not provide for an
exclusion from the assessment base for BICs. Effective July 11, 1994,
the FDIC amended Part 327 of its regulations to make clear that BICs
are excluded from the assessment base. You note also that § 330.16 of
our regulations provides grandfathering treatment for deposit insurance
purposes. It further provides that any rollover or renewal of a time
deposit prior to December 19, 1993 shall subject those deposits to the
rules in effect on the date of the rollover or renewal.

1. You ask if the amended regulation should be applied
retroactively to January 1, 1994. If not, you interpret our regulations
to require that all BICs entered into between January 1, 1994 and July
11, 1994 be included in the assessment base.

Our assessments are not based upon average balances in
the various accounts. Rather, they are based upon the balance in an
account at the end of the period for which a statement is required.
Reporting of these balances is guided by the instructions to the call
report, including any supplementary instructions issued in connection
with the instructions for the call report. Supplementary instructions
allowed the deduction of BICs from the assessment base for the
assessment period ending on December 31, 1994 and the semiannual period
ending in mid-1994.

2. You read § 330.16 of our deposit insurance regulations to
mean that BICs entered into prior to December 19, 1993 are insured and
added into the assessment base. BICs entered into after that date are
no longer insured.

Section 330.16 does not determine assessability. The discussion
above indicates that BICs have been deductible under either the
supplementary instructions to the call report or the amended
regulation, 59 Fed. Reg. 29714 (1994) (to be codified at
12 CFR § 327.4(b)(2)(v)).
We also note that grandfathered deposits are insured and subject to
assessment.

If you have any further questions, please write or call me at (202)
898-3723. My Fax number is (202) 898-3715.